Opinion
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
APPEAL from a judgment of the Superior Court of Los Angeles County No. BC333656. Richard L. Fruin, Judge.
Law Office of Delores A. Yarnall, Delores A. Yarnall; Ammirato & Palumbo and Bruce Palumbo for Plaintiff and Appellant.
Barger & Wolen, Robert J. McKennon and Jenny H. Wang for Defendant and Respondent.
Retired Associate Justice of the Court of Appeal, Second Appellate District, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.
Dr. Alfred E. Forrest (Forrest) sustained physical injuries in an automobile accident. At the time of the accident, he was working approximately 40 hours a week as an obstetrician and gynecologist (OB-GYN) in private practice and approximately 40 hours a week as Associate Medical Director of King/Drew Medical Center. After the accident, Forrest could no longer work as an OB-GYN. However, he continued to work full-time as a medical director. Forrest applied for “total disability” benefits under a disability income policy, which Provident Life and Accident Insurance Company (Provident) issued to him years earlier. Given Forrest’s ability to work full-time as a medical director, Provident denied him benefits on the ground that he was not “totally disabled” as defined by the policy. Forrest sued Provident for breach of contract and the trial court granted summary judgment in favor of Provident. We reverse.
BACKGROUND
For purposes of summary judgment, the parties do not dispute the following facts:
Sometime in 1988, Forrest applied for disability insurance from Provident after speaking with Stephen Hammitt, an agent authorized to sell Provident insurance polices. In February 1989, Provident issued a “disability income” insurance policy (Policy) to Forrest, which entitled Forrest to monthly benefits if he became “totally disabled” through injury or sickness.
Under the “DEFINITIONS” section, the Policy provided in pertinent part:
“Total Disability or totally disabled means that due to Injuries or Sickness:
1. you are not able to perform the substantial and material duties of your occupation; and
2. you are receiving care by a Physician which is appropriate for the condition causing the disability.
your occupation means the occupation (or occupations, if more than one) in which you are regularly engaged at the time you become disabled. If your occupation is limited to a recognized specialty within the scope of your degree or license, we will deem your specialty to be your occupation.” (Original emphasis, italics added.)
When Forrest applied for the Policy, he stated his “Occupation” as “OB-GYN” and his “Exact duties” as “Obstetrics & Gynecology.” Sometime in 1989 (after the policy was issued), Forrest began teaching OB-GYN at Charles Drew University while he continued practicing as an OB-GYN.
The record contains no evidence regarding how much time Forrest spent teaching at the university.
In 1995, Forrest became the Associate Medical Director of King/Drew Medical Center. From 1995 to 1997, Forrest worked approximately 40 hours per week at this job and earned approximately $190,000 per year. During this same time period, i.e., from 1995 to 1997, Forrest continued to work approximately 40 or more hours a week as an OB-GYN in private practice and earned an additional $140,000 per year.
According to Forrest, as Associate Medical Director, he was “responsible for special focus and responsibility in the design, implementation and development of an integrated utilization review, risk management and quality management program for the King/Drew Medical Center.” He “also assisted in establishing, maintaining, and monitoring the standards of professional conduct for the medical staff.” Forrest spent 98% of his time performing administrative tasks and 2% of his time working with medical students and interns.
On December 23, 1997, Forrest was injured in an automobile accident. After the accident, Forrest’s hours as an OB-GYN decreased to eight to ten hours per week, and then apparently, to nothing at all. However, Forrest continued to work full-time as a medical director. From 1998 through 2003, Forrest worked approximately 40 hours a week and earned an average of $234,000 per year as a medical director.
Forrest’s approximate yearly income from his work as a medical director was: 1998 - $192,000; 1999 - $204,000; 2000 - $215,000; 2001 - $236,000; 2002 - $275,000; 2003 - $283,000.
On March 26, 1998, Forrest’s attending physician determined that Forrest could no longer push, pull, or lift anything greater than five to ten pounds, or engage in any overhead activities, due to injuries he sustained in the vehicular accident. Given these physical limitations, Forrest could no longer perform any of the surgeries, patient examinations, and call obligations of an OB-GYN. Forrest filed a claim with Provident for “total disability” benefits starting March 26, 1998. At the time Forrest made his claim, the maximum monthly benefit under the policy was $6310.00.
The parties dispute when Forrest actually filed his claim for benefits with Provident. Because that dispute is immaterial to the questions presented in this appeal, we will not recite the evidence submitted by the parties on this topic.
In December 2004, Provident denied Forrest’s claim for “total disability” benefits. According to Provident, because Forrest had two “occupations” at the time he became disabled (OB-GYN and medical director), and could still perform one of these “occupations” (medical director), he was not “totally disabled” under the terms of the Policy.
On February 25, 2004, Forrest claimed that his disability prevented him from working as both an OB-GYN and as medical director. Provident began paying Forrest total disability benefits on this date under a reservation of rights. Thus, this appeal concerns only the time period between March 26, 1998 (the date Forrest claims his disability commenced) and February 24, 2004 (the date before Provident began making disability payments).
In May 2005, Forrest sued Provident for breach of contract, declaratory relief, breach of the implied covenant of good faith and fair dealing, and violation of Business and Professions Code section 17200. Forrest subsequently dismissed his section 17200 claim without prejudice. The trial court granted summary judgment for Provident, concluding that under the plain language of the Policy, Forrest was not “totally disabled.” Forrest timely appealed from the final judgment.
In the same complaint, Forrest also sued Hammitt, the agent who sold him the Policy, for negligence. Hammitt did not join Provident’s motion for summary judgment, and this appeal does not concern the status of Forrest’s claim against Hammitt.
DISCUSSION
A. Standard of review.
“A trial court properly grants summary judgment where no triable issue of material fact exists and the moving party is entitled to judgment as a matter of law. (Code Civ. Proc., § 437c, subd. (c).) . . . [O]nce a moving defendant has ‘shown that one or more elements of the cause of action, even if not separately pleaded, cannot be established,’ the burden shifts to the plaintiff to show the existence of a triable issue; to meet that burden, the plaintiff ‘may not rely upon the mere allegations or denials of its pleadings . . . but, instead, shall set forth the specific facts showing that a triable issue of material fact exists as to that cause of action . . . .’ (Code Civ. Proc., § 437c, subd. (o)(2); see Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 854-855.)” (Merrill v. Navegar, Inc. (2001) 26 Cal.4th 465, 476-477.)
On appeal, we review the trial court’s decision de novo, considering all of the evidence the parties offered in connection with the motion (except that which the court properly excluded) and inferences the evidence reasonably supports. (Artiglio v. Corning Inc. (1998) 18 Cal.4th 604, 612.) In reviewing the evidence, we strictly construe the moving party’s evidence and liberally construe the opposing party’s and accept as undisputed only those portions of the moving party’s evidence that are not contradicted. “Only when the inferences are indisputable may the court decide the issues as a matter of law. If the evidence is in conflict, the factual issues must be resolved by trial. ‘Any doubts about the propriety of summary judgment . . . are generally resolved against granting the motion, because that allows the future development of the case and avoids errors.’ [Citation.]” (Binder v. Aetna Life Ins. Co. (1999) 75 Cal.App.4th 832, 839.)
B. Breach of contract.
1. Principles of policy interpretation.
The proper interpretation of an insurance policy is a question of law. (Powerine Oil Co., Inc. v. Superior Court (2005) 37 Cal.4th 377, 391 (Powerine).) On appeal from a grant of summary judgment, we review the trial court’s interpretation of the policy de novo. (Ibid.)
In construing an insurance policy, courts look first at the language of the policy “to ascertain its plain meaning or the meaning a layperson would ordinarily attach to it.” (Waller v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1, 18.) “We are . . . guided by the principle that words in an insurance policy must be read in their ordinary sense, and any ambiguity cannot be based on a strained interpretation of the policy language.” (Producers Dairy Delivery Co. v. Sentry Ins. Co. (1986) 41 Cal.3d 903, 912 (Producers).)
“[W]here the policy is clear and unequivocal, the only thing the insured may ‘reasonably expect’ is the coverage afforded by the plain language of the mutually agreed-upon terms.” (Croskey et al., Cal. Practice Guide: Insurance Litigation (The Rutter Group 2000) ¶ 4.9, pp. 4-3 to 4-4; Bank of the West v. Superior Court (1992) 2 Cal.4th 1254, 1264 (Bank of the West) [if policy language is “clear and explicit, it governs”]; VTN Consolidated, Inc. v. Northbrook Ins. Co. (1979) 92 Cal.App.3d 888, 892 [insurance policy “must be construed from the language used and . . . where . . . its terms are plain and unambiguous, the courts have a duty to enforce the contract as agreed upon by the parties”].)
If, however, the policy language is ambiguous -- meaning that it is capable of two or more reasonable interpretations -- it is interpreted in accordance with the objectively reasonable expectations of the insured. (Bank of the West, supra, 2 Cal.4th at p. 1265; Producers, supra, 41 Cal.3d at p. 912 [“It is a basic principle of insurance contract interpretation that doubts, uncertainties and ambiguities arising out of policy language ordinarily should be resolved in favor of the insured in order to protect his reasonable expectation of coverage”].) This rule, however, applies “only when the policy language is found to be unclear.” (Ibid.) In interpreting an insured’s objectively reasonable expectations, courts may properly consider admissible extrinsic evidence. (Cooper Companies v. Transcontinental Ins. Co. (1995) 31 Cal.App.4th 1094, 1107, fn. 9.)
2. The Policy is ambiguous.
The trial court concluded that Provident’s interpretation of the policy was the correct one: that because Forrest was able to perform his duties as medical director he was not totally disabled under the policy. It is the definition of the term “your occupation” upon which Provident focuses for its interpretation that if the insured has more than one occupation the insured must be disabled from each occupation before coverage exists. To reach that conclusion requires an interpretation of the definition which is not obvious or clear.
The phrase “the occupation (or occupations, if more than one) in which you are regularly engaged at the time you become disabled” does not define the term “your occupation.” It merely establishes a date of reference for purposes of determining what “occupation” or “occupations” the insured is engaged in when the disabling event occurs. Nor does the second sentence of the purported definition define the term. It merely states that the insurer will deem the insured’s specialty his or her “occupation” if the insured’s “occupation is limited to a recognized specialty.”
There is no clear and unambiguous statement anywhere in the policy as to what constitutes one’s “occupation.” For instance, if an insured works as an OB-GYN for 40 hours a week and a hospital administrator for 20 hours a week, does he have one or two occupations? What if an insured works as an OB-GYN for 30 hours a week and works as hospital administrator for an additional 50 hours a week, but for nominal pay? Does he have one or two occupations? What if an insured works as an OB-GYN for 30 hours a week, and depending on the hospital’s need, he works as an administrator for an additional 10 - 40 hours a week? Does he have one or two occupations? The point of these hypotheticals is that the Policy does not define what work activities constitute an insured’s “occupation.” While the Policy does explain that an insured must be unable to perform the occupation (or occupations) that he was regularly engaged in at the time of disability to receive “total disability” benefits, it provides no direction for the insured to understand what work activities constitute one’s occupation.
This ambiguity is especially salient for medical specialists, like Forrest, who spend years training in a particular specialty and likely think of that specialty as their “occupation” in the ordinary sense of the word, regardless of whether they also engage in additional (however extensive) administrative tasks. There is no clear and unambiguous statement anywhere in the policy that if Forrest began to work at a second job, whether he considered that second job an “occupation,” he must be totally disabled from that job and from OB-GYN before coverage exists. At best, given the facts presented, the language of the policy creates an ambiguity and we look to the objectively reasonable expectations of the insured. (Bank of the West, supra, 2 Cal.4th at p. 1265.)
The word “occupation” is not defined in the policy. In its ordinary sense it is defined as: “1 a: an activity in which one engages occupation> b: the principal business of one’s life.” (Merriam-Webster’s Online Dictionary: http://www.merriam-webster.com/dictionary/occupation.)
When Forrest applied for the policy his “principal business” was his OB-GYN specialty. The policy was marketed to Forrest as an “occupational disability” policy. “Under [this] type of policy, the coverage is limited to the duties of a particular occupation, and the insured is protected as a particular workman.” (Erreca v. Western States Life Insurance Co. (1942) 19 Cal.2d 388, 393. In the application Forrest stated his “Occupation” as “OB-GYN” and listed his “Exact duties” as “Obstetrics & Gynecology.” He continued to so practice for 40 or more hours per week up through the date of his automobile accident, which he asserts as the triggering date of his disability. Thus, as of the date of his accident he was still fully engaged in the “occupation” listed in the application. While it is undisputed that on the date of the accident Forrest was the Associate Medical Director of King/Drew Medical Center, it is objectively reasonable to believe that Forrest considered his OB-GYN practice to be his “principle business” or “occupation” and that he would be covered if he became disabled from his OB-GYN practice. The policy does not clearly and unambiguously state otherwise. Because the policy is ambiguous, we conclude the trial court erred by granting summary judgment for Provident.
Although we grant Forrest’s request for judicial notice of Hangerter v. Provident Life and Accident Insurance Co. (9th Cir. 2004) 373 F.3d 998, and Merrick v. Paul Revere Life Ins. Co. (9th Cir. 2007) 500 F.3d 1007, we note that neither decision has bearing on the issues presented in this appeal.
DISPOSITION
The judgment is reversed. Appellant shall recover his ordinary costs on appeal.
We concur: MALLANO, P. J. ROTHSCHILD, J.